ASIA PACIFIC WIRE & CABLE CORP LTD

Asia Pacific Wire & Cable Corporation Limited (APWC) operates as a holding company primarily engaged in the manufacture and distribution of enameled wire, power cable, and telecommunications products, alongside providing project engineering services in supply, delivery, and installation (SDI) of power cables across Thailand, Singapore, Australia, PRC, Hong Kong, and other Asia Pacific markets. The company's revenue generation is transactional, stemming from product sales and services, with major customers including appliance component manufacturers, electrical contracting firms, state-owned entities, wire and cable dealers, and factories. APWC's business model is characterized by its reliance on its controlling shareholder, Pacific Electric Wire & Cable Co., Ltd. (PEWC), for raw material supply and research and development, as outlined in the Composite Services Agreement. The company does not currently utilize artificial intelligence technologies to any significant or material extent in its operations or product offerings.

APWC's operations are segmented into three primary reporting regions: North Asia, Thailand, and Rest of World (ROW). The North Asia segment, which includes subsidiaries in China and Hong Kong, primarily produces and sells enameled wires directly to manufacturers of electric motors for consumer appliances, and has expanded into marketing new energy storage systems. The Thailand segment, encompassing Charoong Thai Wire & Cable Public Co. Ltd. and its subsidiaries, manufactures and sells enameled wires, power cables, and telecommunication cables, with distribution channels including direct sales to state-owned entities and private sector participants. The ROW segment, comprising subsidiaries in Singapore and Australia, produces and sells low voltage power cables, distributes wire and cable products from third-party suppliers and PEWC, and offers SDI project engineering services for power transmission projects.

For the fiscal year ended December 31, 2025, APWC reported total revenue of $489,679 thousand ¹, an increase from $472,672 thousand ² in 2024. Gross profit for 2025 was $34,427 thousand ³, down from $35,095 thousand ⁴ in 2024, resulting in a gross profit margin of 7.0% ⁵ in 2025 compared to 7.4% ⁶ in 2024. Operating profit decreased to $6,377 thousand ⁷ in 2025 from $10,008 thousand ⁸ in 2024, representing a 36.3% ⁹ decline. Net profit for the year was $5,214 thousand ¹⁰, a decrease from $6,568 thousand ¹¹ in 2024. Diluted earnings per share for equity holders of the parent was $0.18 ¹² in 2025, a slight increase from $0.17 ¹³ in 2024. Cash and cash equivalents stood at $33,163 thousand ¹⁴ as of December 31, 2025, down from $34,035 thousand ¹⁵ in 2024. Total interest-bearing loans and borrowings were $42,338 thousand ¹⁶ ($41,828 thousand ¹⁷ current and $510 thousand ¹⁸ non-current) as of December 31, 2025, compared to $28,970 thousand ¹⁹ ($24,098 thousand ²⁰ current and $4,872 thousand ²¹ non-current) in 2024. Net cash used in operating activities was $7,755 thousand ²² in 2025, a significant shift from $24,300 thousand ²³ provided by operating activities in 2024.

Year-over-year, revenue increased by $17,007 thousand ²⁴, or 3.6% ²⁵, from 2024 to 2025. This growth was driven by a 19% ²⁶ increase in North Asia revenue to $86,293 thousand ²⁷ (from $72,608 thousand ²⁸ in 2024) and a 2% ²⁹ increase in Thailand revenue to $176,862 thousand ³⁰ (from $172,793 thousand ³¹ in 2024). ROW revenue saw a slight decrease of 0.4% ³² to $226,524 thousand ³³ (from $227,271 thousand ³⁴ in 2024). Gross profit margin contracted from 7.4% ³⁵ in 2024 to 7.0% ³⁶ in 2025, primarily due to a higher contribution from project-based and public sector sales, which limit the ability to immediately pass through copper price increases. Operating profit declined by $3,631 thousand ³⁷, or 36.3% ³⁸, mainly due to changes in product mix in Thailand and a slight decline in orders in the ROW region. Income tax expense decreased by $1,306 thousand ³⁹, or 46.5% ⁴⁰, from $2,809 thousand ⁴¹ in 2024 to $1,503 thousand ⁴² in 2025, attributed to increased deferred tax assets from net operating losses recognized by CTW.

During the reported period, APWC completed a rights offering in February 2026, generating gross proceeds of approximately $34.1 million ⁴³ from the sale of 20,616,227 ⁴⁴ Common Shares. These proceeds are earmarked for general working capital, corporate purposes, expansion of manufacturing capacity, entry into the North American market, and investment in new products and technologies. The company also noted an agreement to sell buildings and land use rights at Shanghai Yayang, though the purchaser was unable to obtain requisite governmental approvals in 2025, leading to ongoing discussions regarding potential termination. APWC also increased its investment in Asia Pacific New Energy Co. Ltd. (APNEC) by $3.9 million ⁴⁵ (NT$120 million) on December 15, 2022, to fund fishery solar farm and on-train communication system integration projects, which remain at a development stage.

APWC recently completed a rights offering in February 2026, raising gross proceeds of approximately $34.1 million ⁴⁶ from the sale of 20,616,227 ⁴⁷ Common Shares. These funds are intended for general working capital and corporate purposes, including the expansion of manufacturing capacity, entry into the North American market, and investment in new products and technologies. The company expects total capital expenditures in 2026 to be $0.2 million ⁴⁸, which will be funded from operations, with plans to purchase new equipment to expand production capacity in Australia and Thailand.

A key growth area for APWC is the development of an alternative energy business in Taiwan through its subsidiary, Asia Pacific New Energy Co. Ltd. (APNEC). This initiative aims to leverage new tax-driven development incentives provided by the Taiwan government for the expansion of "green" energy alternatives. APNEC's projects, including a fishery solar farm and on-train communication system integration, are currently at a development stage and have not yet generated material revenue. The company also plans to invest in new technologies such as flow battery energy storage systems, energy management systems, EV motor and powertrain products, and data center products, which are expected to serve as new drivers for future growth and enhance the product portfolio.

The company's operational outlook is influenced by its ability to manage raw material costs, particularly copper, which accounts for a majority of its cost of sales. APWC's strategy is to "peg" product prices to the prevailing market price of copper to pass through cost changes to customers. However, in fixed-price, long-term sales contracts, rising copper prices can render contracts onerous, requiring the recognition of losses. The gross profit margin decreased from 7.4% ⁴⁹ in 2024 to 7.0% ⁵⁰ in 2025, partly due to a higher contribution from project-based and public sector sales with fixed or pre-agreed pricing. The company's cost of sales increased by 4.0% ⁵¹ in 2025, from $437,577 thousand ⁵² in 2024 to $455,252 thousand ⁵³. Selling, general and administrative, research and development expenses increased by 10.2% ⁵⁴ to $28,502 thousand ⁵⁵ in 2025 from $25,855 thousand ⁵⁶ in 2024.

APWC's supply chain posture is characterized by reliance on numerous suppliers for raw materials like copper, aluminum, polyethylene, and polyvinyl chloride compound. The company maintains a few weeks' supply of copper rods and cathodes and has one-year contracts with copper suppliers, with prices typically pegged to the LME spot price plus a premium. The company does not anticipate material supply interruptions but acknowledges that shipping delays could increase copper acquisition costs. The company's facilities in Thailand, Singapore, Australia, and China utilize production processes and equipment imported from Europe, the United States, Taiwan, or Japan.

Planned capital allocation for 2026 includes $0.2 million ⁵⁷ for capital expenditures, primarily for new equipment to expand production capacity in Australia and Thailand. The company does not currently conduct its own research and development, benefiting from PEWC's R&D at minimal or no cost under the Composite Services Agreement. APWC does not have a current share repurchase plan or program. The company's dividend policy, approved in 2016, aimed to pay annual cash dividends of at least 25% ⁵⁸ of net post-tax audited consolidated profits attributable to shareholders, but the Board has not paid a dividend since 2019 and does not anticipate paying any dividends in 2026.

Structural headwinds include significant volatility in copper prices, which can be detrimental to profitability, especially with fixed-price contracts. Geopolitical instability in the Middle East has caused disruptions in global petroleum and aluminum supply chains, leading to price volatility and supply constraints. The LME aluminum price peaked above $3,400 per tonne ⁵⁹ in March 2026, and Brent crude prices surged from approximately $73 to over $103 per barrel ⁶⁰ by mid-March 2026. These increases directly impact manufacturing costs and could reduce gross margins. Operational curtailment and force majeure at petrochemical hubs in the Gulf region also pose risks to polymer supply. Geographic and regulatory factors include unpredictable trade policies and tariffs, such as the temporary import surcharge of 10 percent ad valorem ⁶¹ imposed by President Trump in February 2026. The PRC legal system's uncertainties regarding interpretation and enforcement of laws, including those on foreign investment, cybersecurity, and anti-monopoly, could affect APWC's PRC subsidiaries. The PRC government's control of currency conversion and expatriation of funds may also affect liquidity. Political or social instability, particularly tensions between the PRC and Taiwan, could materially adversely affect business operations.

APWC faces material risks from several fronts, including significant volatility in copper prices, its principal raw material, which can lead to margin compression, especially in fixed-price contracts, and inventory revaluation losses during long-term price decreases. Geopolitical instability in the Middle East has caused disruptions in global petroleum and aluminum supply chains, with LME aluminum prices peaking above $3,400 per tonne ⁶² in March 2026 and Brent crude prices surging from approximately $73 to over $103 per barrel ⁶³ by mid-March 2026, directly increasing manufacturing costs and potentially reducing gross margins. The company is also exposed to unpredictable trade policies and tariffs, such as the temporary import surcharge of 10 percent ad valorem ⁶⁴ on certain articles imported into the United States, effective February 24, 2026, which could negatively impact global trade and demand for products. Operational risks include potential supply chain disruptions from economic, political, and climate-related factors, and the highly competitive wire and cable industry, where certain state-owned enterprises (SOEs) may receive governmental subsidies, making it untenable for private enterprises to compete profitably. Furthermore, the company's reliance on its majority shareholder, PEWC, for raw materials and R&D under the Composite Services Agreement, introduces a risk if PEWC fails to perform its obligations. Cybersecurity breaches and information system failures pose a threat to intellectual property and operational continuity, while the decentralized nature of subsidiary operations across multiple jurisdictions creates governance challenges and vulnerabilities to mismanagement and fraud.

Management's tone emphasizes strategic adaptation and investment for future growth, particularly in response to global supply chain realignments and surging demand for energy and infrastructure. The company has completed a rights offering, raising approximately $34.1 million ⁶⁵, with the explicit intention to use these proceeds for general working capital, corporate purposes, expansion of manufacturing capacity, entry into the North American market, and investment in new products and technologies. This highlights a forward-looking strategy focused on diversification and market expansion. Management also acknowledges the ongoing challenges posed by volatile raw material costs, especially copper, and geopolitical factors, stating their intent to "peg" product prices to prevailing copper market prices to mitigate impacts on operating margins. Despite a dividend policy aiming for at least 25% ⁶⁶ of net post-tax audited consolidated profits attributable to shareholders, management has not paid a dividend since 2019 and does not anticipate paying any in 2026, indicating a prioritization of reinvestment into the business and maintaining liquidity over shareholder distributions in the near term. Key strategic priorities include leveraging global supply chain re-alignment, expanding into new geographies like North America and Southeast Asia, and investing in new technologies such as flow battery energy storage systems, energy management systems, EV motor and powertrain products, and data center products to drive future growth.